Commercial & Industrial Property News Update

Malaysia - Sunway REIT To Expand Property Assets

October 10, 2012

Market analysts said that a recent corporate announcement will likely involve the injection of a medical or education property into Sunway Real Estate Investment Trust (Sunway REIT).

Sunway Bhd is set to inject more assets into Sunway REIT, with the intended properties likely to be medical or educational properties owned by the former.

Market observers noted that in August, chief financial officer Wai Sow Fun of Sunway REIT Management Sdn Bhd had named four properties - Sunway University, Monash University Sunway, Sunway Giza and Sunway Medical Centre - as candidates to be injected into the trust.

Currently, Sunway REIT comprises of 11 properties, of which four are retail assets, four are hotels and three are office buildings.

Wai added that Sunway REIT was looking to acquire third-party assets in key growth cities in Malaysia, including Klang Valley, Johor and Sabah. These would most likely be retail or mixed-use developments.

"When the time is right and when the price is right, we will make the acquisition," she said.

Market watchers describe Sunway REIT, the second-largest Malaysian REIT by market capitalisation and the leader by assets, as having the best potential for the addition of future properties, compared to other REITs.

CIMB Research said that Sunway has a pipeline of properties worth RM 3 billion completed or under construction that could be added to Sunway REIT. The brokerage has picked Sunway REIT as the top choice in the sector.

"Sunway REIT will try its best to acquire new assets this year in order to increase its asset size. It is targeting to increase its asset value by 51% from RM 4.6 billion to RM 7 billion in three to five years’ time," said CIMB in a report in August.

As at 30 June, Sunway REIT had cash and equivalents of RM 25.8 million, with RM 4.6 billion in total assets. The trust's gearing was recorded at 35%, meaning that the company had comfortable headroom to raise its leverage for more property acquisitions before reaching the legal limit of 50%.

Sunway REIT units have gained 21% for the year, ending yesterday up one sen to RM 1.51 on 1.06 million transactions.

Tags: Commercial real estate, Shop for rent, Income properties

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